EUR/CHF Outlook:
Bearish, with the rate currently below its recent average and near recent lows.
Key drivers:
• Rate gap: The European Central Bank (ECB) maintains rates while the Swiss National Bank (SNB) considers negative rates, which may undermine the euro's standing.
• Risk/commodities: Oil prices are significantly above average, potentially benefiting the Eurozone economy but not sharply enough to strengthen the euro against the franc.
• One macro factor: Switzerland’s high inflation and safe-haven demand continue to support the Swiss franc, putting pressure on the euro's strength.
Range:
EUR/CHF is likely to drift within its recent range, constrained by the current bearish pressure.
What could change it:
• Upside risk: A resolute shift in the ECB's policy stance towards rate hikes could rekindle euro strength.
• Downside risk: Increased geopolitical tensions or further appreciation of the CHF due to safe-haven buying could push the pair lower.